Tata Steel Ltd. and the trustee of the British Steel Pension Scheme have agreed to terms to separate the plan from the Indian steelmaker’s UK unit, eliminating the last hurdle for it to proceed with a strategy to place European operations into a joint venture.
The Mumbai-based company has signed the regulated apportionment arrangement with the pension trustee and the terms are expected to take effect in a month’s time, the trustee said in a statement.
The pact would be effective after Tata Steel pays $715 million and a 33 percent equity stake in the UK operations to the trustee, the steelmaker said.
Over the past year, the Indian company has sold off some of its
unprofitable assets in the UK as it sought to
cut losses amid an industry slowdown and glut in supply.
It started discussions with firms including Thyssenkrupp AG for a possible joint venture in Europe more than a year ago, even as Tata promised labour unions it would run the company’s Port Talbot unit for at least five years. Thyssenkrupp had identified the pension liabilities as a major stumbling block to any possible deal and is said to have a plan B in place as talks drag on.
The separation of the pension scheme from Tata Steel is part of a proposal to secure the future of the remaining